Thousands of veterans face foreclosure and it's not their fault. The VA could assist
By Chris Arnold, Robert Benincasa
Updated Thursday, November 16, 2023 • 9:53 AM EST
Heard on Morning Edition
Becky Queen remembers opening the letter with the foreclosure notice.
"My heart dropped," she said, "and my hands were shaking."
Queen resides on a little farm in rural Oklahoma with her partner, Ray, and their two young kids. Ray is a U.S. Army veteran who was injured in Iraq. Since the 1940s, the federal government has actually helped veterans like him purchase homes through its VA loan program, run by the Department of Veterans Affairs.
Now the VA has put this household on the edge of losing their home.
"I didn't do anything wrong," says Ray Queen. "The only thing I did was trust a company that I'm supposed to rely on with my mortgage."
Like millions of other Americans, the Queens took benefit of what's called a COVID mortgage forbearance, which permitted property owners to skip mortgage payments. It was established by Congress after the pandemic hit for individuals who lost earnings.
But an NPR examination has found that countless veterans who took a forbearance are now at threat of losing their homes through no fault of their own. And while the VA is working on a way to fix the issue, for many it could be far too late.
After NPR initially published this story, a group of four U.S. Senators sent out a letter to the VA asking it to right away stop foreclosing on the homes of veterans and servicemembers. It's uncertain if the VA will do that.
For the Queens, this all begun in September of 2021, when Becky's mom died of COVID-19. She needed to take a prolonged leave from work and lost her task.
So in 2015, with their cost savings diminishing, the couple says they called the company that handles their mortgage, Mr. Cooper, and were informed they might avoid 6 months of payments. And as soon as they returned on their feet and could begin paying again, the couple states they were informed, they wouldn't owe the missed payments in a huge lump amount.
"I very particularly asked 'how does this work?'" states Becky Queen. "They said we're taking all of your payments, we're bundling them, and we're putting them at the end."
That is, the missed payments would be relocated to the back end of their loan term so they could just begin making their normal mortgage payment once again.
But that's not how it worked out.
In October 2022, the Department of Veterans Affairs ended the so-called Partial Claim Payment program, or PCP, that enabled property owners to do that. This happened even though the mortgage industry, housing supporters and veterans groups all cautioned the VA not to end the program, saying thousands of homeowners needed to catch up on missed out on payments. Rate of interest had increased a lot that many could not pay for to re-finance or return on track any other way.
Ray Queen says no one informed him about any of this.
"How does that take place?" Queen asked. "This is expected to be a program that you all have to help individuals in times of crisis, so you do not take their house from them."
The Queens say they tried to come off their forbearance in February of this year and resume paying their mortgage. They were both working again. But they encountered hold-ups with the mortgage business.
Then, in September, the couple states they were informed they needed to come up with more than $22,000, which they don't have, or either sell their house or get foreclosed on.
Their mortgage servicing business, Mr. Cooper, stated in a statement it "checked out every possible avenue to resolve a service for this client." But it said the VA needs much better loss-mitigation options and referred NPR to a letter from supporters, market and veteran groups advising the VA to reboot the PCP program.
The VA "has truly let individuals down"
"The Department of Veterans Affairs has actually let individuals down," says Kristi Kelly, a consumer lawyer in Virginia who states she is hearing from a great deal of other veterans in the exact same circumstance as Ray and Becky Queen.
"The house owners participated in COVID forbearances, they were made sure guarantees, and there were particular representations that were made," states Kelly. "And the VA essentially pulled the rug out from under everybody."
For some homeowners, ending the program may not imply foreclosure, however it still indicates a monetary difficulty.
"Many of these people have 2 or 3% interest rate loans," Kelly states. With the PCP program they could keep that rate of interest. But now, she states, the only way they'll have the ability to save their home is to enter into a loan modification where the rate of interest will be around today's market rate of 7.5%.
"For the majority of individuals, their payments will increase by $600 or $700 a month, because the VA has actually chosen to end the partial claim program."
Many property owners can't afford such a huge increase in their month-to-month payment.
According to the data company ICE Mortgage Technology, 6,000 house owners with VA loans who had actually COVID forbearances are presently in the foreclosure procedure. And 34,000 more are delinquent.
Kelly states most other house owners in America - individuals with FHA loans, for example, or loans backed by Fannie Mae and Freddie Mac - still have ways to prevent foreclosure by moving missed payments to the back of the loan term.
But house owners with VA loans don't, because the VA ended that program. So veterans are being treated worse than many other house owners, Kelly stated.
"Service members are in a position where they're going to lose their home," she states. "And for many people, that's whatever they work for - and all their wealth is in their homes."
VA has a strategy to help, however it might be too late
The Department of Veterans Affairs states it had no choice but to end the program.
"We had a short-term authority for that particular program throughout COVID," states John Bell, executive director of the Veterans Benefits Administration's Loan Guaranty Service. "It wasn't part of our normal authority."
Some in the market think the VA did, in truth, have the authority to extend the program. But in any case, it ended it.
Now, however, the VA is taking the circumstance seriously.
NPR has actually learned that the VA is dealing with a new program to change the old one. It will work in a various method but to comparable result, to save individuals from foreclosure. Bell says it's going to take four to five months to get it up and running.
That's too wish for numerous of those 6,000 VA homeowners already in the foreclosure procedure. Not to mention the many more who are overdue.
Already, information shows that more VA property owners have actually been heading into foreclosure because the VA ended its PCP program. The exact same is not real for FHA loans or loans backed by Fannie Mae or Freddie Mac.
Will the firetruck arrive far too late?
With numerous property owners at danger, there's growing pressure on the VA to stop foreclosing on veterans till it gets its spruce up and running.
"There need to be a pause on foreclosures," says Steve Sharpe, a senior attorney at the National Consumer Law Center. "Veterans ought to truly be able to have an ability to access this program when it comes online because it's been so long since they've had something that will really work.
Sharpe states the VA might likewise restart the PCP program that it shut down. "They have the authority to do both," he states.
Pausing foreclosures seems like a great concept to veteran Ray Queen in Oklahoma.
"Let us keep paying towards our routine mortgage in between once in a while," he states. "Then when the VA has that repaired we can return and attend to the scenario. That looks like the adult, fully grown thing to do, not put a family through hell."
NPR repeated Ray Queen's plea to John Bell at the VA directly. Bell stated the VA is "checking out all choices at this point in time."
"We owe it to our veterans to ensure that we're giving them every opportunity to be able to stay in the home," Bell said.
Wednesday, a group of U.S. Senators sent out a letter to the VA urging them to put a hold on any more foreclosures.
"Without this pause, countless veterans and servicemembers could unnecessarily lose their homes," Sens. Sherrod Brown, Jon Tester, Jack Reed, and Tim Kaine, all Democrats, composed in a letter to VA Secretary Denis McDonough. "This was never the intent of Congress."
Tester, of Montana, chairs the Veterans' Affairs Committee, and Brown, of Ohio, chairs the Banking Committee. They asked the VA "to carry out an instant pause on all VA loan foreclosures where borrowers are most likely to be eligible for VA's new ... program until it is offered and borrowers can be assessed to see if they certify."
Ray and Becky Queen are hoping the VA does let individuals keep their homes till the brand-new program can use them a way to get existing on their mortgages. Because if the firetruck reveals up after your home has burned down, it's not going to do much great for the thousands of veterans and service members who require aid now.
Transcript
LEILA FADEL, HOST: An NPR investigation has found that thousands of U.S. military service members and veterans could lose their homes through no fault of their own. As NPR's Chris Arnold reports, the Department of Veterans Affairs is working on a repair. But it might be too late.CHRIS ARNOLD, BYLINE: Ray and Becky Queen are revealing us around their farm in Bartlesville, Okla.BECKY QUEEN: This is Cagney and Lacey, our ducks.ARNOLD: The couple lives here with their two young kids. Ray served in Iraq in the Army. Inside their house, he says that he was wounded by an improvised explosive device, or IED.RAY QUEEN: And so you know, I have brain damage from my time in Iraq. So there's a great deal of various things that do not work the way they're expected to any longer. And my memory is not great.ARNOLD: For years, the federal government's helped veterans like Queen to buy homes through its VA loan program. But now the VA has actually put this family on the verge of losing their house.B QUEEN: This is the letter that my other half and I received yesterday specifying that they're beginning foreclosure proceedings.ARNOLD: What's taking place is that like millions of other Americans, the Queens made the most of what's called a COVID mortgage forbearance. It was set up by Congress after the pandemic hit for individuals who lost earnings. When Becky's mom passed away of COVID, she needed to take an extended leave from work and lost her task. In 2015, the couple states their mortgage business informed them that they could avoid six months of payments while they got back on their feet and after that just begin paying their mortgage again.B QUEEN: I very specifically asked, how does this work? And they said, we're taking all of your payments. We're bundling them, and we're putting them at the end.ARNOLD: That is, the missed out on payments would move to the back end of their loan term so they might resume their normal mortgage payment. But that is not how it worked out, due to the fact that a year ago in October, the Department of Veterans Affairs ended the program that allowed property owners to do that, despite the fact that housing supporters and the mortgage market and veterans groups all warned them not to end the program since countless house owners needed to catch up on missed out on payments. Rates of interest, too, had increased so much that lots of could not pay for to refinance or get back on track any other way. Ray Queen says no one told him about any of this.R QUEEN: How does that take place? This is supposed to be a program that y' all need to help individuals in times of crisis so you do not take their home from them.ARNOLD: The couple states in September, they were informed that they required to come up with a big payment - upwards of $22,000, which they do not have - or sell their home or get foreclosed on.B QUEEN: My heart dropped, and, like, my hands were shaking.KRISTI KELLY: The Department of Veterans Affairs has actually let people down.ARNOLD: Kristi Kelly is a customer lawyer in Virginia who's hearing from a lot of veterans who remain in the same boat.KELLY: The homeowners entered into COVID forbearances. They were ensured pledges, and the VA essentially pulled the rug out from under everybody.ARNOLD: Kelly states for many other homeowners in America, there are still ways to move your missed out on payments to the back of the loan term so you can avoid getting foreclosed on, however not if you have a VA loan. So she states veterans are being dealt with worse than the majority of other homeowners.KELLY: Service members are going to lose their home, and for the majority of people, that's whatever they work for and all their wealth, are in their homes.ARNOLD: For its part, the Department of Veterans Affairs says it had no choice but to end the program. John Bell directs the VA's home financing division.JOHN BELL: We had a short-term authority for that specific program throughout COVID.ARNOLD: Some in the industry believe the VA did really have the authority to extend the program. Now, though, NPR has learned that the VA is dealing with a new program to change the old one, but that's still 4 or 5 months away - too long for much of the 6,000 property owners with VA loans who remain in the foreclosure procedure. Not to discuss there's 34,000 more who were overdue. Today there's pressure on the VA to put a pause on foreclosures while it gets that program running. John Bell states the VA is, quote, "considering all options."BELL: We owe it to our veterans to make certain that we're giving them every chance to be able to stay in the home.ARNOLD: Ray and Becky Queen are hoping that the VA does put a pause on foreclosures, since if the fire truck appears after your home burns down, it's not going to do much helpful for the thousands of veterans who require help now.Chris Arnold, NPR News.
